Macroeconomics
Swiss paper shows macro impacts on two safe-haven currencies
Authors surprised to find no significant impact on franc or yen stemming from euro crisis; foreign macroeconomic data has asymmetric impact
Australasia has avoided stagnation trend – RBNZ’s Bascand
Different household behaviour in Australia and New Zealand appears to have contributed to higher growth and investment
BoJ paper designs new measure of trend inflation
Author’s measure reflects the weighted average of an adaptive component and a forward-looking component
Fed’s Powell sees China as major factor in global trade slowdown
Fed governor seeks to explain global trade slowdown, citing many factors but saying China “looms large” in the debate
Central banks should sacrifice some independence – Harvard economists
A group including the UK’s Ed Balls says central banks are losing legitimacy; handing over some “political independence” could reverse the trend without damaging policy outcomes
BIS’s Shin links dollar strength to global malaise
Head of research outlines how dollar strength affects leverage globally, causing deviations from covered interest parity and potentially impacting growth and trade
IMF paper seeks to quantify debt bias
Tax systems create “pervasive” debt bias, authors find, arguing for policy action before the problem worsens
Visco hits out at lack of ‘cohesion’ among Europe’s political leaders
ECB governing council member calls for targeted structural reforms in the euro area; says a euro area finance minister must have fiscal capability and not be “another referee”
RBA paper finds it is hard to pinpoint US productivity slowdowns
Break in productivity growth trend in US appears to have happened in early 1970s, although beliefs took three decades to fully adjust, authors find
SNB paper models ‘sticky consumption’ in Switzerland
Assuming consumption habits are slow to change helps produce more robust results than other methods, author finds
Fischer examines growth dilemma
Fed vice-chairman says behaviour of inflation and output as economy normalises may provide some answers
Barro and Summers wrestle with productivity puzzle
Veteran economists seek to offer explanations and policy prescriptions for strong employment and weak growth in the US and elsewhere
Oil price rises and US GDP growth have ‘complex relationship’ – paper
Paper studies interaction of oil price and economic growth in US from 1875 to 2016
Hedging demand can cause covered interest parity violations – BIS paper
US dollar forward hedging demand can cause covered interest parity to fail even when markets are calm, authors say, helping explain this post-2012 anomaly
Lagarde welcomes ‘major policy shift’ in Saudi Arabia
IMF managing director says efforts to reduce reliance on oil are “very welcome”, although Gulf countries more generally need to continue their fiscal adjustment
Commodity prices create ‘strong pressure’ to lower interest rates – paper
Policy response to commodity price fluctuations has been stronger in the US, paper finds; commodity price shocks follow two cycles, with the most recent having impacts on policy rates
Rand volatility not driven by South African economic ‘surprises’ – IMF paper
IMF working paper finds that surprises in commodity prices, domestic politics and US economics impact the volatility of the South African rand rather than economic surprises in South Africa or China
Demographics could explain entire drop in real rate – Fed paper
Authors find ageing population can explain most – or even all – of the estimated decline in the long-run real interest rate, implying low rates are here to stay
Maskin: technocrats should set eurozone fiscal policy
Harvard economist argues a technocratic body similar to a central bank could set spending and revenue targets in eurozone before allowing politicians to determine the details
RBI’s Mundra: pinning down credit-GDP link is tricky
Deputy governor says a host of factors combine to make the link between credit and growth unclear, but the link may reinstate itself as the economy stabilises
BoE’s Forbes studies generation of ‘global tsunamis’
External MPC member asks why some global shocks have major consequences and others do not, seeking answers in countries’ financial linkages, common shocks and contagion
Richmond Fed tries to bridge gap between rules and discretion
Economist presents research urging Fed to be more explicit about its strategy using “graphical framework”, while Jeffrey Lacker says rules offer valuable guidance to policy-makers
Eurozone exchange rate pass-through has declined over time – researcher
Italian exchange rate pass-through has behaved very differently from other major eurozone economies – particularly Germany’s – paper finds
RBA’s Kent considers life after the mining boom
Australian economy is well into an adjustment, following the country’s mining investment boom; RBA correctly identified the patterns of adjustment, but was surprised by the magnitude